From JDSupra, Stefanie Renaud discusses the recent California appellate case which said that the new ABC test for independent contractors does not apply to the question of joint employment and offers guidance for employers going forward. Stefanie writes:
The case, Curry v. Equilon Enterprises, LLC, resolved two important questions: 1) whether the ABC test applies to the joint employer analysis; and 2) if not, how should courts analyze independent contractor status for joint employment purposes.
Here, the Appeals court analyzed the “engage” prong of the joint employer test – which considers whether a worker is an employee or independent contractor – using the eight-factor common law test. After concluding the Defendant was not the Plaintiff’s employer, the court went on to address the Plaintiff’s argument that the ABC test should be used instead when analyzing the joint-employment “engage” prong. The court concluded that the California Supreme Court had not intended for the ABC test to apply in the joint employer context. Specifically, the court noted:
“In the joint employment context, the alleged employee is already considered an employee of the primary employer; the issue is whether the employee is also an employee of the alleged secondary employer. Therefore, the primary employer is presumably paying taxes and the employee is afforded legal protections due to being an employee of the primary employer. As a result, the policy purpose for presuming the worker to be an employee and requiring the secondary employer to disprove the worker’s status as an employee [as required in the ABC test] is unnecessary in that taxes are being paid and the worker has employment protections. . . Placing the burden on the alleged employer to prove that the worker is not an employee is meant to serve policy goals that are not relevant in the joint employment context. Therefore, it does not appear that the Supreme Court intended for the “ABC” test to be applied in joint employment cases.” (emphasis added)
. . .Maybe
Employers should be aware, however, that the Appeals court then went on to briefly analyze the “engage” prong using the ABC test, concluding that the test was not met in that case. Curry has not yet been appealed, but should the California Supreme Court grant a petition to review the Appeals court’s decision, it could be reversed, putting the stricter ABC test into place in the joint employer context as well.
What Curry Means for Employers
For now, this seems like good news for staffing and temporary placement agencies, as well as for employers who rely on independent contractors for a significant portion of their workforce. That’s because the Curry decision indicates that the use of staffing agencies could shield the agency’s client from both joint employment and independent contractor liability. This is because the Plaintiff-worker will be limited to arguing their proper classification – as joint employees and as independent contractors of the second potential employer – within the context of the joint employer framework. Because the joint employer analysis uses the more generous common law test, rather than the markedly stricter ABC test to determine independent contractor status, employers can craft policies and practices that support their classification of a worker as an independent contractor.